During the franchising agreement, franchisors must give franchisees certain information or documents that are updated, created or requested.
If there is a marketing fund, a franchisor must give a franchisee:
- the annual marketing fund financial statement
- an auditor’s report of the marketing fund financial statement, unless enough franchisees agree not to have it audited.
A franchisee can ask for a copy of the disclosure document once every 12 months. The request must be made in writing.
Franchisors have to fulfil the request within 14 days or, if the franchisor was only required to update the disclosure document for the relevant financial year because the franchisee requested a copy of it, within 2 months of the request being made.
If certain important details about the franchise system change any facts that are 'materially relevant' and this information is not in the disclosure document, the franchisor has to let franchisees or potential franchisees know about it.
The franchisor usually has to do this within 14 days of becoming aware of the fact and the information must be provided in writing.
Materially relevant facts are defined in the franchising code and include things like:
- the owner (or person or entity who controls) the franchisor or franchise system changes
- legal proceedings and judgments involving the franchisor
- insolvency events
- the franchisor is going into receivership or administration.
If the new fact relates to the franchisor’s financial details and a person is about to sign a franchise agreement, the franchisor must give the potential franchisee a copy of the new statement, declaration or document as soon as possible and before they enter into the franchise agreement.
If, during the franchise agreement, the franchisor requires the franchisee or people involved in the franchisee business, such as directors, to enter into other agreements, they must provide copies of these agreements 14 days before a franchise agreement is signed or when the agreements are available.
Examples of agreements are:
- a hire purchase agreement
- a guarantee
- a loan agreement
- a confidentiality agreement
- a lease, other than a lease of the franchise premises.
If the franchisee will have a lease or occupancy agreement with the franchisor for the premises, the franchisor has to give the franchisee specific information in addition to giving them copies of those agreements.
Franchisors have to give franchisees certain documents and information if they are occupying or leasing premises for their franchise from the franchisor or an associate of the franchisor.
- a copy of the lease and if applicable, occupancy agreement
- information that the lessor must give to a lessee under the relevant state or territory retail tenancy laws
- information about any incentive or financial benefit that the franchisor or its associate gets because of the lease or occupancy arrangement.